Daily US Opening News And Market Re-Cap: September 15

An article in the Imerisia newspaper said that participation in the Greek debt rollover has exceeded 82%

UBS shares fell more than 8% in early trade after news emerged that a trader at its investment bank unit has caused a loss of around USD 2bln

GBP received a boost following higher than expected retail sales data from the UK, together with a rise in the BoE's 12-month inflation forecast

SNB said that it will continue to aim for 3-month LIBOR at 0, and is aiming to defend a EUR/CHF target of 1.2000

Market Re-Cap

European equities traded higher for a vast majority of the session after Greece told France and Germany yesterday that it was determined to meet all obligations agreed with international lenders in exchange for an EU/IMF bailout. An article in the Imerisia newspaper saying that participation in the Greek debt rollover has exceeded 82% further helped appetite for risk, whereas a well-bid bond auction from Spain also brought positive sentiment in the market. However, UBS shares fell more than 8% in early trade after news emerged that a trader at its investment bank unit has caused a loss of around USD 2bln, while Societe Generale was seen lower around 4% following a sharp rise in the ECB's overnight lending facility. In other news, the USD-Index weakened as the European session progressed, which in turn provided strength to EUR/USD, GBP/USD and commodity-linked currencies, whereas GBP received a boost following higher than expected retail sales data from the UK, together with a rise in the BoE's 12-month inflation forecast. However, CHF weakened following dovish comments from the SNB and after the central bank kept its 3-month LIBOR Target Rate unchanged at 0.00%. Also, weakness was observed in NZD after the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.50%. Elsewhere, WTI and Brent crude futures received support with a decline in the USD-Index, allied with news that Europe's largest refinery, run by Royal Dutch Shell, will cut its output in October.

Moving into the North American open, key economic data from the US in the form of jobless claims, CPI, current account balance, industrial production, and Philadelphia Fed are all due for release. Markets will also keep a close eye on any relevant comment on the ongoing Eurozone debt crisis, and Greece in particular. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Sep'15-Feb'17, with a purchase target of USD 2.75-3.50bln, together with a 10-year TIPS refunding announcement are also scheduled for later.

Asian Headlines:

According to a survey by the PBOC, inflation expectations among urban Chinese residents rose in the third quarter and most consider consumer prices unacceptably high. Zhang Xiaoqiang, vice chairman of the country’s top economic planning agency also said that China’s inflation had reached a ‘turning point’ and is likely to fall steadily in the coming months. A separate central bank survey showed that 56.4% of respondents expected higher interest rates in the fourth quarter, down from 68.2% in the previous quarter. (RTRS)

In other news, Japanese PM Noda said the economy will grow more than 2% in the fiscal year beginning in April 2012. (Sources)

US Headlines:

The US is a ‘long way’ from risk of default and Treasuries are still the safest dollar assets, said Kim Eng Tan, senior director for sovereign-debt ratings at S&P. (Sources)

In other news, default notices on U.S. homes notched their biggest monthly increase in four years in August, though overall foreclosure activity was down compared with a year ago, a report by RealtyTrac said. First-time default notices were filed on 78,880 homes last month, marking a nine-month high and up 33% from July. It was the biggest increase since August 2007. (RTRS)

EU and UK Headlines:

EFSF CFO said the EFSF is ready to raise more funds for Greece if given the mandate. He also said the fund isn’t likely to issue a long-term bond for Ireland or Portugal before the first week of October. (Sources)

NOTE: Moody’s 90 day review of Italy’s sovereign credit rating expires today, however the report could be released anytime between today and Saturday.

European equities traded higher for a vast majority of the session after Greece told France and Germany yesterday that it was determined to meet all obligations agreed with international lenders in exchange for an EU/IMF bailout. An article in the Imerisia newspaper saying that participation in the Greek debt rollover has exceeded 82% further helped appetite for risk, whereas a well-bid bond auction from Spain also brought positive sentiment in the market. However, UBS shares fell more than 8% in early trade after news emerged that a trader at its investment bank unit has caused a loss of around USD 2bln, while Societe Generale was seen lower around 4% following a sharp rise in the ECB's overnight lending facility. Elsewhere, weakness in the USD-Index provided support to the oil & gas and basic materials sectors. Moving into the North American open, equities continue to trade higher with industrials and oil & gas as the best performing sector.

FX

The USD-Index weakened as the European session progressed, which in turn provided strength to EUR/USD, GBP/USD and commodity-linked currencies, whereas GBP received a boost following higher than expected retail sales data from the UK, together with a rise in the BoE's 12-month inflation forecast. However, CHF weakened following dovish comments from the SNB and after the central bank kept its 3-month LIBOR Target Rate unchanged at 0.00%. Also, weakness was observed in NZD after the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.50%. The RBNZ said it is prudent to hold interest rates for now, however, it was ready to raise rates to fight inflation when global financial risks subside.

COMMODITIES

WTI and Brent crude futures traded in positive territory in earlier trade as the USD-Index sits in negative territory and risk appetite returns to the markets.

Oil & Gas News:

• Libya's NOC Chairman says oil production will reach 800,000-1mln BPD within six months. In related news Libya sees crude production at 1.6 MBPD by the end of 2012. according to a Libyan central bank official• HSBC Holdings Plc. Sees Brent oil prices declining by about 18% next year on ample crude supplies and a shrinking risk premium as unrest in the Middle East and North Africa diminishes.• Chinese end of August refined fuel inventory up 1.64mln over a year earlier. Chinese natural gas imports nearly doubled over a year earlier at 20.2BCM. And Chinese apparent gas consumption up 21.7% on year at 84.2BCM.• There is no limit to how wide the WTI/Brent price spread can reach because the infrastructure constraints in the US essentially prevent arbitrage between the continents of Europe and North America, according to an economist from Goldman Sachs.

Geopolitical News:

• The French and British leaders will visit Libya on Thursday to congratulate the new rulers they helped install, but families fleeing besieged bastions of ousted strongman Gaddafi are a reminder that peace is still far off.